I have working interest in a well that is non profitable to produce in its current zone. The well was drilled in 2005 and the logs show a very good zone upper from the zone that is currently being produced. Can i go non consent on the current zone that is being operated and then when the upper zone is re-completed be back in on the well? If so, what if anything will i owe the operator? Thanks in advance
This is a contractual issue governed by the terms of the Operating Agreement and any other contracts which govern the financial and legal relationship between the various working interests, including the operator. State law and case decisions may also affect your rights and obligations. There may be further issues arising out of the terms of the oil and gas lease(s) through which your working interest is derived. If you are an unleased mineral owner, that can further complicate the answer. Best thing to do is to consult an attorney in your state who understands working interests and operations.
Thanks for the response TennnisDaze
TY,
If you were force pooled and made a decision to lease, the FP order may not allow you to change options if the FP application and order included the upper zone formation. If you have a separate lease or arrangement with the operator independent of an order, work it out with them. If the operator plans to enter the upper zone with a new permit, and your lease allows the option, take it. But don't forget the operator's risk in successfully completing in another zone. In Horizontal wells, it could be significant if they are not well financed and very experienced.
Gary L Hutchinson
Minerals Managment
Thanks for the reply Gary. I actually have the working interest in the well bore only. The operator is trying to continue to produce in a lower zone of the morrow that is racking up expenses and i want to go non consent in the current production-stop paying my JIB's, but i am not sure if i would be out of the well if the upper morrow zone is produced in the near future. Thanks for the information.
TY, I think you will have to comply with the rules in the JOA. But remember that the Morrow is extremely fickle. As a minority owner, you should complain about the lower zone development costs. Find out what the operator plans are and confirm any data on tests run in the upper zone. Maybe the operator will drill another well to it and let you off the hook in the lower zone. But do a plot of the St. Louis below. I've done well from the St Louis when the Morrow is marginal. (especially if you are on a seismic high.) Talk to the operator's geologist. He or she may know more than you are being told.
I worked with an old Morrow geologist that prayed he would go to heaven when he died so the could ask the Lord about how the Morrow was laid down as he could never figure it out. Fickle!!
Gary Hutchinson